Li v Yeung

[2021] NZHC 355

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2473

[2021] NZHC 355

UNDER

the Fair Trading Act 1986, the Financial Markets Conduct Act 2013

IN THE MATTER

of breach of the Fair Trading Act 1986, negligence, knowing receipt, unjust enrichment, and breach of the Financial Markets Conduct Act 2013

BETWEEN

KAREN KAYAN LI AND OTHERS

Plaintiffs

AND

LAM YEUNG AND OTHERS

Defendants

Hearing:

On the papers

Counsel:

C McLean and D Torii-Lee for Plaintiffs D Dufty for Seventh Defendant

K Puddle and P Shanahan-Pinker for Eighth and Fourteenth Defendants

Judgment:

3 March 2021

JUDGMENT (COSTS) OF CAMPBELL J

This judgment was delivered by me on 3 March 2021 at 3:30 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

LI AND OTHERS v YEUNG AND OTHERS [2021] NZHC 355 [3 March 2021]

[1]                 On 21 December 2020, the plaintiffs applied, without notice, for freezing orders over properties owned by the defendants. On 23 December 2020, Gault J made those freezing orders, but limited their duration until 6 January 2021. His Honour listed the application in the Duty Judge list for that date.

[2]                 The application came before me, as Duty Judge, on 6 January 2021. The purpose of the application being listed on that date was to review the freezing orders and decide whether they should be continued or renewed. The plaintiffs bore the onus, pursuant to r 32.7(3) of the High Court Rules 2016, of satisfying me that the orders should be continued or renewed.

[3]                 In my judgment dated 6 January 2021, I declined to continue or renew the freezing orders. I said that the defendants who appeared that day (the seventh, eighth and fourteenth defendants) were entitled to costs. The parties have been unable to agree costs. They have filed memoranda. These raise three disputes.

[4]                 The first concerns the nature of the appearance before me, and therefore the appropriate time allocations under r 14.5 and sch 3. The defendants say that the appearance was essentially, or analogous to, a hearing of an interlocutory application. The eighth and fourteenth defendants say that items 24 and 26 of sch 3 therefore apply. At Band B, item 24 allows for 1.5 days for “preparation of written submissions”, and item 26 allows the time occupied by the hearing for “appearance at hearing of defended application for sole or principal counsel”. The seventh defendant is of the same view, but makes no claim for item 24, as she did not file anything in advance of the appearance.

[5]                 The plaintiffs say an appearance in a Duty Judge list is an appearance at a callover, rather than an appearance at a hearing. They say items 11 and 12, which are under the heading “Case management”, apply. Item 11 at Band B allows for 0.4 of a day for filing a memorandum at a case management conference or mentions hearing, and item 12 allows 0.2 of a day for appearance at a mentions hearing or callover.

[6]                 I accept the defendants’ position. Proceedings are sometimes called in a Duty Judge list merely to deal with procedural matters. When that happens, items 11 and

12 are appropriate. But this proceeding was called on 6 January 2021 to determine a substantive matter: whether the freezing orders should continue. The plaintiffs had applied for those orders by interlocutory application. On 6 January 2021, the defendants who appeared opposed the continuation of the orders. The appearance was therefore the hearing of a defended interlocutory application. Items 24 and 26 apply.

[7]                 The next dispute is subsidiary to the first, and concerns only the eighth and fourteenth defendants. Their counsel filed a memorandum in advance of the hearing, opposing continuation of the freezing orders. The plaintiffs say that this memorandum, which they note contained only 15 paragraphs, did not constitute “written submissions”, and that this is another reason that item 24 is inapplicable.

[8]                 I disagree. The label on a document is not determinative. In substance the memorandum made submissions as to why the freezing orders should not continue. In large part I accepted those submissions. It is true that the submissions were concise. Concise submissions are likely to reflect more work than those that are prolix. Succinctness is not a reason for a lower costs award.

[9]                 There is a third dispute. The eighth and fourteenth defendants seek a 50 per cent uplift on the costs allowed by items 24 and 26. They rely on r 14.6(3)(a) and (b). They say that there was material non-disclosure by the plaintiffs in applying for the orders. The plaintiffs should have drawn to the Court’s attention various matters that suggested there was no risk of the defendants dissipating their assets. They also complain that the plaintiffs delayed effecting service.

[10]              The plaintiffs oppose any increase. They say that at [22] of my decision refusing to continue the freezing orders, I set out four points that told against any risk of dissipation. Of those four, they say three were fully disclosed in the affidavits filed in support of the application for the freezing orders.

[11]              Rule 32.2(3) provides that an applicant for a freezing order without notice must fully and frankly disclose to the Court all material facts. Given an applicant must show there is a real risk the defendant will dissipate or dispose of assets, material facts will include those bearing on that risk.

[12]              The plaintiffs are correct that most of the facts relevant to the risk of dissipation were disclosed in their affidavits. It is evident that Gault J was aware of those matters. His Honour’s minute of 23 December 2020 noted, at [5], that the plaintiffs’ unsuccessful attempts to recover their money, and previous complaints to regulators, “appear not to have caused dissipation to date”. But, as the plaintiffs acknowledged, they did not disclose one of the matters I took into account in refusing to continue the freezing orders.

[13]              It was also surprising that (even allowing for the time of year) the plaintiffs served the eighth defendant only the day before the appearance on 6 January 2021. Gault J had directed that service be effected “forthwith”. The delay in service meant counsel had to prepare for the appearance on 6 January 2021 under urgency, which would have contributed to unnecessary time being spent on the matter.

[14]              In my judgment the points in the previous two paragraphs justify an uplift, under r 14.6(3)(b), of 25 per cent.

Result

[15]              The plaintiffs are to pay costs of $597.50 to the seventh defendant (being a quarter day under item 26, at category 2).

[16]              The plaintiffs are to pay costs of $5,228.13 to the eighth and fourteenth defendants (being 1.5 days under item 24 and a quarter day under item 26, at category 2, with a 25 per cent uplift).

Campbell J